I Can’t Carry This Anymore. Should I Sell?
A report from MENAFN-AFP on China. “Chinese household debt has risen at an ‘alarming’ pace as property values have soared, analysts say, raising the risk that a real estate downturn could send shockwaves through the world’s second largest economy. Loose credit and changing habits have rapidly transformed the country’s famously loan-averse consumers into enthusiastic borrowers. the debt owed by households in the world’s second largest economy has surged from 28 percent of GDP to more than 40 percent in the past five years. The share of household loans to overall lending hit 67.5 percent in the third quarter of 2016, more than twice the share of the year before. ‘The notion that Chinese people do not like to borrow is clearly outdated,’ said Chen Long of Gavekal Dragonomics.”
“But this surge has raised fears that a sharp drop in property prices would cause many new loans to go bad, causing a domino effect on interest rates, exchange rates and commodity prices that ‘could turn out to be a global macro event,’ ANZ analysts said in a recent note. Banks are also driving the phenomenon, Andrew Polk of Medley Global Advisors told AFP. ‘Banks have been pushing people to buy houses because they need to make loans,’ he said, as corporate borrowing has dried up.”
From Bloomberg on the UK. “U.K. real estate prices may be dropping at a much faster pace than official reports indicate, according to the Irish agency that manages property loans acquired from bailed-out banks. Earlier this month, Stephen Vernon, chairman of Dublin-based Green Property, said London’s real estate market is ‘tanking by the day.’”
The Review Online on South Africa. “While the importance of pricing a property correctly in order to sell it within a reasonable amount of time has been stressed countless times, the current buyer’s market coupled with a sluggish economy has made correctly pricing a property paramount to the sale happening at all, never mind within a reasonable amount of time, according to Debbie Justus-Ferns, divisional manager of Renprop Residential Sales.”
“‘Testing the market in order to ascertain what buyers would potentially be prepared to pay is not advisable for any seller right now,’ she says. ‘This strategy will often put any prospective buyers off as they have other properties to choose from. As a result, an overpriced property will just end up promoting the purchase of a comparative or similar property that is priced correctly.’”
From The Australian. “Brisbane’s apartment construction boom has spurred a ‘flight to quality’ as renters move from old suburban flats into new apartments, in a phenomenon set to be watched by the Reserve Bank. Brisbane renters are exploiting the more than 5200 new apartments built in the first nine months of the year to vacate suburbs between 5km and 15km from the central business district. The rollout of an expected 13,000 more apartments over the next 18 months in inner-city Brisbane, along with 16,000 more in Melbourne’s inner suburbs in two years, is being monitored by the Reserve Bank as the key areas for potential future oversupply.”
“In order to keep up sales and rents, developers are offering a range of incentives to get people into their apartments. Increasingly, short-term rental guarantees of up to 5 per cent gross are being advertised, while others will throw in furniture packages, pay body corporate rates or shell out for furnishings. A completed four-townhouse development in Morningside offered a Kia Picanto car to the first buyer to go unconditional. Ray White Bulimba agent Jared Candlin said the bonus car promotion was ‘a way to get people’s attention’ in the crowded marketplace. ‘But with what is going on with the amount (of units) available, people might just miss them because they are looking at so many.’”
The Calgary Sun in Canada. “Close to 40% of Calgary’s available rental listings are unoccupied, according to a local property management company which says the weak market has become a major source of financial stress for small, private landlords. ‘I have never seen it this grim before,’ said Shamon Kureshi, CEO of Hope Street Real Estate Corporation. ‘I have never seen this level of difficulty for landlords trying to find a tenant.’”
“Kureshi said big companies are far better positioned to manage the declining market conditions than ‘mom and pop’ landlords. ‘We’re talking about the people who are renting out their basement suite to make ends meet or the family who’s maybe invested in a second house that they’re renting out for the purpose of retirement savings,’ he said. ‘I’m probably getting two, three, sometimes five calls a day from these people saying, ‘I can’t carry this anymore. Should I sell?’”
“Rebecca Yarmoloy — who together with her husband bought her first rental suite in 2013 and now owns a total of four properties in Calgary — said the past year has been challenging, with each of the suites vacant at times, occasionally for up to three months in a row. She said they now allow pets in their suites, something they never would have considered before but have been doing to make their properties more appealing to renters.”
“‘When we first bought we were getting top dollar for all of our suites,’ Yarmoloy said. ‘We’ve definitely taken a big pay cut on all of them, as well as struggled to find tenants. We’ve had to reduce all of our rents substantially, and we’ve also just had trouble finding good people.’”